Can we get a post-mortem, please?
An FKD Feature exclusive

One of the biggest deals in New York City’s recent history went down in flames when Amazon announced it was no longer going to open a second headquarters (HQ2) in Queens, NY. Here is what NY lost in Amazon’s retreat from the deal. The mayor and the governor were both in favor of the deal, but some local politicians and community activists were against it. Alas, the fact that the two most important politicians in the State and most of its population were in favor of the deal wasn’t enough to keep it alive and safe from the protestors’ iron will of staunch, albeit misguided, disapproval.

The deal

In exchange for nearly $3 billion in public subsidies, Amazon agreed to bring upward of 25,000 jobs, many of them high-paying, and other investments to the city. Amazon also agreed to make local hires, including many from the nearby housing project, one of the largest in the country, and to fund some tech education in NYC’s public high schools. Many decried the deal for its generous $3 billion tax-incentive offer while things like the city’s infrastructure went, they claimed, ignored. However, the proponents of the deal pointed out that Amazon coming to New York would bring $27 billion to New York state’s coffers — $27 billion that would have gone to all businesses, and not just the massive, wealthy ones. Keep in mind, New York’s total budget is $89.15 billion. Why did New Yorkers say no to billions of dollars in investment? Just because Jeff Bezos, a rich (rich) man is going to prosper, too, is no reason to reject the deal. Amazon had a lot of options from which to choose for their HQ2 (more than 200 municipalities competed for the privilege of hosting the headquarters and many offered much larger tax breaks). New Yorkers probably should have played ball. Again, it was $27 billion (with a b).

The opposition

Much of the opposition arose from the fact that Jeff Bezos was getting such a massive tax break. And some people were doubly agitated when they heard that Bezos planned to build a helipad. This anger was misplaced. The focal point should have been how much New York was poised to receive from the deal, and not whether Jeff Bezos was going to go from richer to richer(er). Many New Yorkers were pissed. They believed incorrectly that their taxes were going to go to Amazon: that when they wrote their check at the end of the year to New York City, or New York state, or when they get some of their paycheck money withheld, some portion of that money would go to Amazon and Jeff Bezos’ helicopter. But that’s just not true.

The simple math

Here’s how the math works: We get 25,000 employees. They’re making an average of $150,000 each. That’s $400 million. There’ll probably be more employees than that, and they’re probably going to get paid more than that. They are going to pay taxes and buy goods and services. And, Amazon planned to develop between 4 and 8 million square feet, that’s a lot of local construction jobs. It’s a great deal. Amazon is getting richer, but New Yorkers are getting richer, too. Try to remember that. Yeah, maybe the subway will get a little bit more crowded, but Amazon promised to help with the local infrastructure to support the influx of people. Isn’t Amazon more than compensating for that fact (cough, cough $27 billion cough, cough)?

Takeaway

Not to beat a dead horse, but the most important number here is $27 billion. It’s more than a billion dollars a year for 25 years! Moreover, it was a chance to diversify the economic base of New York by increasing the representation of the tech industry in the tax base.

Mayor Bill de Blasio is quoted as having said that the Amazon deal would have benefited average New Yorkers. He called the deal an “astounding return on investment” that would have created “literally an unprecedented number of jobs” and that would have “blow[n] away anything we’ve ever seen.” Just maybe he and the governor could have done a better job in explaining the deal and its importance to the average New Yorker.  In any case, that’s water under the bridge.

Farewell Amazon. Farewell $27 billion. Farewell 1,300 construction jobs. Farewell 107,000 in total direct and indirect jobs. Farewell to plenty more. Farewell.

 

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Posted 02.21.2019 - 10:50 am EDT